Tencent Holding Ltd. recently confirmed its participation in a US$1 billion investment round in Indian food delivery service Swiggy. The massive funding round was led by Naspers Ltd, Africa’s internet and media giant, which was joined by new investors such as Hillhouse Capital and Wellington Management Company, along with existing investors including DST Global, Meituan Dianping, and Coatue Management.

This fresh investment was the largest financing round in India’s food-tech industry and brings the Bangalore-based startup’s value to US$3.3 billion, making it India’s sixth highest-valued private internet company. Previously, Naspers had led investment in Swiggy in May 2017, February 2018, and June 2018. The South African conglomerate, which owns 31% of Tencent’s stake, is entrenching itself in India’s food industry through Swiggy following the startup’s rapid growth this year.

“Swiggy has ten times the number of orders per month since our first investment in 2017,” said Larry Illg, Naspers’s chief executive officer of food and ventures. “Our latest round of capital will help to accelerate Swiggy’s journey of providing unmatched convenience in food ordering and delivery for Indian consumers.”

Swiggy will use the new funding to expand its delivery-only kitchens under the ‘Access’ initiative and focus on building a next-generation AI-driven platform.

India has nearly 500 million internet users and a rich, colorful food culture. Quartz India reported that the country’s food tech sector—including services that cover delivery, production, sales, restaurant reviews, and reservations—was valued at US$480 million in August 2018, more than tripling the valuation at US$135 million in 2017. The sector is projected to grow to US$2.5 billion by 2021.

Swiggy leads India’s food delivery industry, ahead of Zomato Order, Uber Eats, and Food Panda. The company currently fulfills 25 to 28 million orders per month, while Zomato has 21 million orders in the same time frame. Zomato is backed by Alibaba’s venture arm Ant Financial, and received US$200 million in funding in February 2018, followed by a US$210 million investment by Alipay Singapore in October 2018, an affiliate of Ant Financial, which is the largest stakeholder of Zomato.

Tencent and Alibaba’s proxy war in India

Alibaba and Tencent’s investments in India’s two largest food startups intensify the competition between the two Chinese internet giants. Alibaba’s venture into the Indian startup scene started in 2014 with 48 deals, and the company leads colossal Chinese investment in the country with 13 acquisitions and 84 investments as of February 2018, as reported by

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Alibaba’s investment strategy is to focus on sectors with high-level user engagement, including those beyond e-commerce. In the last three years, Jack Ma’s empire has pumped at least US$2 billion into Indian companies. Notable Alibaba investments in 2018 include US$33.8 million in e-commerce logistics company XpressBees, US$300 million in online grocery store BigBasket, US$150 million in commerce firm Snapdeal, and the aforementioned backing of Zomato. Furthermore, Alibaba owns a 40% stake in Indian e-wallet Paytm.

Meanwhile, Alibaba’s arch rival Tencent also has a strong presence in India, with 10 acquisitions and 227 investments this year. The company participated in a US$1.4 billion funding round of Flipkart along with Microsoft and eBay. Tencent also led a US$1.1 billion financing round for the Indian ride-hailing company Ola, which has an e-wallet named Ola Money. Both Flipkart and Ola Money are competitors of Paytm.

Moreover, Tencent Games—the largest video game company by revenue—is highly favored by India’s gamers, thanks to the popularity of the battle royale shooter game PlayerUnknown’s Battlegrounds (PUBG). In September, the company held India’s biggest eSports tournament, ‘PUBG Mobile Campus Championship 2018,’ which reinforced Tencent Games’ top position in India’s online gaming scene. Another of Tencent’s major ventures was US$115 million in funding for the local music streaming service Gaana in February 2018.

Massive investments from two Chinese internet behemoths indicate the companies’ ambitious expansion plans in India. India’s internet economy is growing at a fast pace, and the country has 1 billion mobile users, 485 million internet users, and 316 million smartphone users today. This sector is a key economic driver, and is projected to be valued at US$250 billion by 2020, so it is no surprise that major foreign investors are piling in to stake their claims.

Editor: Brady Ng